Introduction to Tracing Infrastructure
Laura Del Vecchio
Maksym Kaharlytskyi @ Unsplash
The COVID-19 pandemic struck the supply chain industry in 2020, throwing production strategies into disarray, trade restrictions striking down multinational companies, and shortages of critical medical supplies costing millions of lives. The externalities of COVID-19 exposed deeply rooted vulnerabilities of global supply chains that demand nothing short of a transformation to mitigate or minimize negative consequences, not just in case of future crises, but even for regular trade.
2020 also provided a window into the future. By focusing the world's attention on how supply chains function, it also revealed in detail that manufacturers, distributors, producers, retailers, and consumers must rethink the effectiveness of lean manufacturing strategies that directly affect the supply of their basic necessities. The surge in economic nationalism, triggered by competitive pressures to protect domestic production growth and eliminate the international dependency on sources —and resources— forced governments, decision-makers, and global supply chain managers to be more aware of their local needs, and thereby, the players involved.
These players range in different scales, but the sector of small and medium-sized enterprises (SMEs) hinges on the performance of national and global economies, and this became even more apparent during the pandemic. And, all of this was set against the backdrop of the accelerating climate crisis. In fact, the concept of sustainable supply chains includes three dimensions: business, environmental, and social. This means that besides addressing concerns in terms of end-to-end supply chains' environmental footprint, sustainable development also goes hand in hand with the net damages affecting social systems. In order to act sustainably, therefore, global trade must also capture the needs of SMEs and alleviate the disadvantages small producers face in competition with big corporations.
However, creating robust and interconnected supply chains demands substantial investment and a lot needs to be done in terms of infrastructure change. In the short-term, businesses need to explore a more diversified supplier base instead of relying on monopolized sources of goods and services provision. In the long-term, though, more radical innovations are required. The trend forwarded by the COVID-19 response of acting local will be transcended into another level; supply chains will need to move closer to the end consumer, and digital tools will be demanded for this to happen. Digital tools powered by artificial intelligence, blockchain, and IoT will add a more holistic view of the processes and trades, helping analyze in real-time the modeling and testing of different what-if scenarios, but also providing a contingency strategy that allows supply chain actors to quickly act whenever needed.
Even before COVID-19, many companies have been contemplating what they can do to achieve resilience and sustainability, but the debate of improving supply chains only gained more traction following the global pandemic. GIZ, in partnership with Envisioning, started in the second half of 2020 to conceptualize the efforts needed to achieve sustainable development in managing the future supply chain. Working with a time span of 2030, we have researched and compiled a detailed study that takes into account the necessary mechanisms businesses will need to create to integrate practices that place inclusive economic growth and ethical business practices such as labor rights, environmental security, and product sustainability at the center of their concerns.
This present research piece, Tracing Infrastructure, includes a case study about Digital Twins (DT), a future scenario based on the concept of a Hyperlinked Supply Chain, and a list of five emerging technologies expected to play a pivotal role in impacting the supply chain by 2030. The case study sheds light on the intricacies related to the application of digital replicas of physical assets into specific industries, as well as DT's contributions to sustainable supply chains and potential obstacles it may face in the future. The future scenario reveals the potential consequences and symbiotic articulation of digital technologies in creating an automated, circular supply chain, and, finally, the five technologies list works as a dynamic supplement to the study where we provide a high-level review of the implications these technologies may produce in the supply chain. All three pieces underline how innate transparency and traceability are in supply chains of our future.
We believe these technologies will be crucial in enabling businesses and governments to build resilient, sustainable, and intelligent systems that can go some way to address the negative externalities of trade that traditional supply chains face. While many analyses of supply chains focus on benefits to corporations and their customers, the Tracing Infrastructure pieces flip the coin to consider the impacts on small-scale producers in environmentally vulnerable regions —a perspective that is undeniably under-represented in contemporary reporting.